Stephanie Ferguson Stephanie Ferguson
Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce


January 09, 2020


At the start of the New Year, resolutions are made and gym memberships are bought en masse. Most gym memberships are drawn up like a contract. You sign up for a yearlong membership, and the fee is automatically deducted from your bank account on a monthly basis (and you show up for the first two weeks of January). After the contractual obligation expires, you expect your payment obligation also to expire. However, the fine print dictates that after 12-months, membership rolls over to a month-to-month plan, unless you cancel through a written letter sent to an unadvertised address with at least a 30-day notice. Until late December, unions had a similar arrangement with regard to dues deductions in collective bargaining agreements.

In 2015, the National Labor Relations Board (NLRB) issued a ruling in Lincoln Lutheran of Racine, which forced employers to continue to collect dues and direct the funds to unions after the expiration of a collective bargaining agreement. This ruling argued that since the employer could not unilaterally change an employee’s wages, hours, or other terms of employment during contract negotiations without notifying a bargaining representative, the same prohibition should apply to dues deductions. Instead, an individual employee could revoke their dues checkoff—during a 15-day window once a year through a letter sent by registered mail. In practice, this rule effectively allowed unions to raise funds via payroll deductions despite having an expired contract.

However, on December 16, 2019, the current NLRB ruled on a case brought forth by Valley Hospital Medical Center, Inc. Valley Hospital Medical Center had a collective bargaining agreement with a union that ran from 2013 – 2016. In February of 2018, it discontinued the deduction and remittance of union dues from their employee’s paychecks while still honoring the other terms and conditions of the expired contract.

The union filed an unfair labor practice charge, but it didn’t get the result it might have hoped for. Instead, the NLRB overturned Lincoln Lutheran of Racine in a 3-1 ruling and reinstated Bethlehem Steel, a precedent that had stood for 50 years, holding that an employer’s obligation to honor a dues checkoff arrangement ends when the collective bargaining agreement ends. This makes sense – the union and employees have an agreement running through the duration of the contract, but once that contract ends, so does the financial commitment. If only gym membership contracts were that easy…

Get a more in depth look at the case and ruling here.

About the authors

Stephanie Ferguson

Stephanie Ferguson

Stephanie Ferguson is the Director of Global Employment Policy & Special Initiatives. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.

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